Benchmarks snap two days winning streak

Indian equity indices, snapping two sessions rally, ended the Monday’s trade in the red with a cut of about a percentage point. After a gap-down opening, Indian benchmarks extended their decline to touch low point of the day as depreciating rupee weighed on the market sentiments after breaching 61/$ mark in early deals. Sentiments also remained dampened after a CII survey stated that unless the government tackles issues like dwindling FDI flow and high current account deficit, the rupee will continue to remain volatile and may depreciate further. Sentiments remained down-beat since morning as better-than-expected US jobs growth increased the possibility that the Federal Reserve will roll back its stimulus in coming months, sending the dollar to a three-year high against a basket of major currencies.

Weakness in Asian markets too dampened the sentiments with all the major indices in the region ending in the red. Japanese Nikkei declined by about one and a half percent, giving up initial gains tracking fall in other Asian shares, and partially impacted by Standard & Poor’s downgrade of ratings of Softbank to junk after its multi-billion-dollar acquisition of Sprint Nextel. However, some amount of recovery was witnessed in domestic markets following firm opening in European counterparts. Investors opted to pile up positions in fundamentally strong but beaten-down stocks after Friday’s drop, with chances of Greece getting its next aid payment and an improved political situation in Portugal boosting sentiment.

Back home, recovery also got support from reports suggesting Gold imports into India fell by 80.56 percent to 31.5 tonnes in June from the previous month, way lower than the trade body’s estimate. Some support also came in from buying in software and technology stocks as rupee hit record low against the dollar. A weak rupee boosts revenue of IT firms in rupee terms as the sector derives a lion's share of revenue from exports.

However, the recovery was not enough to pull the bourses back into green terrain as rise in FMCG, software and technology counters was offset by selling in oil and gas, PSU, realty and auto sectors. Sentiments also got hurt after banking stocks including Axis Bank, ICICI Bank, State Bank of India, HDFC Bank and most of the PSU banks slipped over a per cent, weighed down by a weak rupee which further bleaks the outlook on rate cut hopes by the RBI. Additionally, public sector oil marketing companies viz. BPCL, HPCL and IOC declined as US crude oil futures hit a 14-month high.

The NSE’s 50-share broadly followed index Nifty lost over fifty points to end below its psychological 5,850 support level, while Bombay Stock Exchange’s Sensitive Index - Sensex declined by over one hundred and seventy points to finish below its psychological 19,350 mark.

Moreover, the broader markets too struggled through the session and ended the trade in the red. The market breadth remained in favor of declines as there were 1,050 shares on the gaining side against 1,264 shares on the losing side while 117 shares remain unchanged.

Finally, the BSE Sensex lost 171.05 points or 0.88% to settle at 19,324.77, while the CNX Nifty declined by 56.35 points or 0.96% to end at 5,811.55.

The BSE Sensex touched a high and a low of 19,422.69 and 19,185.92, respectively. The BSE Mid cap index was down by 0.06% and Small cap index was down by 0.38%.

The top gainers on the Sensex were, BHEL up by 2.32%, Wipro up 1.50%, ITC up 1.39%, Sun Pharma up 0.78% and Infosys up by 0.70%, while ONGC down by 3.49%, HDFC down 3.01%, Tata Motors down 2.70%, GAIL India down 2.63% and Coal India down by 2.32% were the top losers on the index. 

The top gainers on the BSE Sectoral space were, FMCG up 0.72%, TECk up 0.43%, IT up 0.32% and Capital Goods up 0.13%, while Oil & Gas down 1.94%, PSU down 1.90%, Realty down 1.79%, Auto down 1.51% and Metal down 1.37% were the top losers on the sectoral space.

Meanwhile, Oil Minister M Veerappa Moily has defended the move to hike the gas price and has said that it will benefit the government in terms of revenue as many gas discoveries have been made by public sector companies than private sector. The public sector companies made 90 percent of gas discoveries and the remaining by private sector so the government will get 80 percent of the income from these explorations will be back to government kitty.

Recently the Cabinet Committee on Economic Affairs (CCEA) approved hike in domestic gas prices using Rangarajan formula, which will be effective from April 1, 2014. The approved price is likely to be about $8.4 per million British thermal unit against $4.2 currently.

The minister further stated that US and China produced 40 to 50 percent more gas because of the no foreign investment flows to their country, while our country is going back  and needs due consideration as its difficult to survive if the country imports petroleum products worth Rs 8 lakh crore.

The CNX Nifty touched a high and low of 5,833.85 and 5,775.55 respectively. 

The top gainers on the Nifty were IndusInd Bank up 3.98%, HCL Tech up 3.07%, BHEL up 2.74%, Reliance Infra up 2.48% and ACC up by 1.74%.

On the flip side, the top losers of the index were, BPCL down 5.56%, JP Associates down 4.13%, ONGC down 3.84%, M&M down 2.87% and HDFC down by 2.73%.

The European markets were trading in green, France’s CAC 40 up by 1.75%, the United Kingdom’s FTSE 100 up by 0.29% and Germany’s DAX up by 2.30%.

All the Asian equity indices ended the session in the red with major benchmarks declining by 1 to 4 per cent on Monday after strong US jobs data increased expectations that the US Federal Reserve would ease its stimulus measures within a few months, maybe as early as September. Back on regional turf, Seoul Composite declined by about a percent as technology heavyweight and the largest component on the main index, Samsung Electronics Co, tumbled to a fresh 10-month closing low, weighed down by last week's disappointing earnings estimates. Meanwhile, Japanese Nikkei declined by about one and a half percent, giving up initial gains tracking fall in other Asian shares, and partially impacted by a ratings Standard & Poor’s downgrade of Softbank to junk after its multi-billion-dollar acquisition of Sprint Nextel.